BRITAIN: The British Transport Secretary, Mr Stephen Byers, one of Mr Blair's closest allies and a key supporter of the European single currency, resigned yesterday after a series of political blunders.
He told a hastily-arranged news conference that while he stood by his major policy decisions, "I know I have made mistakes".
Mr Byers (49) said he had become a distraction for the Blair government, and that by remaining in office he would "damage the government".
Once tipped as an outside prospect for prime minister, Mr Byers's career appeared to have been grinding to a halt for several months after a debilitating series of accusations, accidents and evasions.
He told reporters at Downing Street that though he had made mistakes, "the people that know me best know that I am not a liar".
In a statement, the Prime Minister, Mr Blair, said he understood and respected Mr Byers's decision, and his office said there would be a "limited reshuffle" today.
Mr Blair said Mr Byers "has endured a huge amount of criticism, much of it unfair", while continuing to face up to "difficult policy decisions".
Mr Byers had been one of the few ministers ready to speak out in favour of Britain joining the euro. He was seen as an "outrider" for the Labour Party, asserting at one point that, contrary to usual socialist principles, redistributing wealth was now "less important than the creation of wealth". However he had become a liability to the government.
He was accused earlier this year of misleading parliament over an otherwise trivial row which led to the departure of his chief press officer.
Mr Byers had already angered many for failing to sack a key political aide, Ms Jo Moore, who wanted to "bury" bad news on the day of the September 11th attacks.
More seriously, he was accused of fumbling the supervision of the creaking privatised railway system. He put Railtrack into administration late last year, earning plaudits from the left but severe criticism from others.
A train crash at Potters Bar, north of London, earlier this month, in which seven people died, also weakened his position even though it was not directly his fault - the accident is being blamed on a track-switching mechanism.
Two weeks ago, he landed himself in further trouble when he apparently told reporters that the government would introduce legislation later this year with a view to organising a referendum on joining the single currency.
Mr Blair's office was forced to issue a rebuff, insisting no decision had been made. Then, at the weekend, a stinging parliamentary report slammed almost every aspect of the government's 10-year transport plan.
Compounding his sins, in the eyes of his critics, was his perceived failure to admit errors, trying instead to bulldoze his way past his opponents.
"He may not have been a liar," according to Sky News' political editor, Adam Boulton, "but on so many occasions he did not quite tell the truth. That will be his epitaph."
There was also disappointed reaction to his resignation, particularly from union leaders who praised his decision to bring Railtrack back into government control.
Mr John Monks, general secretary of the Trades Union Congress, said Mr Byers's reputation remained high "for standing up for (rail) passengers. In all my dealings with him, I have found him straightforward, decent and committed to the interests of people at work."
Mr Byers is the third key minister to have been forced to quit Mr Blair's government as a result of scandal.
The others were Mr Peter Mandelson, who had the distinction of resigning twice in two years, once as trade and industry secretary and the second time in Northern Ireland, and the former Europe minister, Mr Keith Vaz.
Ironically, Mr Mandelson is now one of the favourites to take Mr Byers's post in today's shuffle.